* 

OFTEXAS 

Han, J, ha. F8lk?st& Opinion No. V-1046, 

Commissioner 

Department of BarM8g Re: The leg#ity of a bank’s, mainAustin, Texas taining deposit facilities in a 

garage building attached to a 

bank buildirq by a tunnel beDear Hr. l?aIknax: low the street. 

In your letter re*werting our opinion retative to the cqtioned matter yau state that 

“A bak poeertly operating ia a bank house owned by It desires to construct an appropx’iate garage 

buildin on another lot directly acrass the street from 

its preseat h&ins house and the kra@e building is to 

be psrmano#ly UJ rtxucturally rttached to the preeeti 

kdr buitdi 

s 

by a Ural suitable fur peraa@ back and 

farth, aad w 

windowd. l ’ 

11 c*n&ia ti *&c-in J4p&it win&w 4r 

You have igluired whethtr thi4 plan contrrvenee AMel* 

XVI, Section 16, of the Texas Constitution, or Chapter IX, Article 3, 

of the Texas Banking Code of 1943. 

. 

“The l,@nlature still by pnsv,pl Irrro net&mire 

t&t incovpaa;rtioa d csrgrrate Mtes with banking rnd 

dbWOUfltio& pliVi!XaO4, I , . 

. 

Chapter ZX, ATtG~tca 3, 6f the Scns krnlt%ng Ctdt d 1*)3. 

emWed ~a Article 343-7@3, V.C.S,,, prouidsa: 

264 tPtat4, tmtiona1 u p&8&t bank shell engay#e 

in bueir#tm in 18ec than me Ma, nraiaitafn any bran& 

office, or wh checks m receive depesits excspt in #B 

own t+nkitq hause. ” 
Ho,n. J, M. FaJkner, Page 2 (V-1046) 

it 

it 

The exact purpose of the foregoing Article is to ptohibbranch banking, This ie clearly indicated in its caption, where 

is provided that it is: 

““An act to accomplish the constitutional directive 

enpressed in Article XVI, Section 16, . ~ ~ . This Act 

~ ~;‘... . prohibits branch banking, ~ o *” 

It is said in Banks and Baokiq, Zollman, Pcrmawnt 

Ed&i&, .volume 2, tictie* 1275, that: 

7 

“‘Branch banks are not mere ‘teller’s windows,’ 

hmt mxc SQ many integral parts or office6 * sgencies 

*f d+count belonging to the metker corporation. ” 

We do nat &ink what is proposed te be done by tht b~rdt 

fo quest&a comes wait&a the conaCihutiona1 oz s&atutorp inbibitians 

l pplicabh to branch bankin& 

Three excellent annotations en the constituent elements 

,of brarich,b~nking art found in 30 A.L.R. 927, 50 A.L.R. 1340, and 

136 A.L.R. 491. A Kentucky cbst, which goes even further than we 

ecuAd attcmprt or need lo do lo l YASWíOT this question, is Marvin ~$I, 

cky Title, Tsust Co., 218 Ky* 133, 291 S.W. 17 (Ky. Ct. App. 

; In Kantuclay; branch.balJrina had been held unauthoriwd WI- 

. 

dar their dpplicabk statute.’ In t&cast cited, the question arode 

(10 tcthe authority of a licensed bank to open a stpratc offict to 

receive depoeits SUMI cash checks, and nothing more, for customers 

d tht principal bank. The Court siid: 

“We bavt held that a bank organietd under the 

,:@w$ & this State has no rigki to establish a branch 

bank. 5zuner Y. Citizens’ I3ank, 134 Ky. 283, 120 S.W. 

~345. B&h parties conctde the MPding fwrce of this opioioa, the centroverted question being OS to whether 

app61166’6 plan to open office6 fclr the receipt of depesit6 ad pplnrnt of checks will corwtitute the estrblish- 

.mirrt’Bd branch kahltr, PO that tbt case may ba said to 

hart3 uw the dd&diirn wf knki?A& e 6 e 

I! 

e * 0 ‘We think the e o . dtfinition from Warrtn 

vr s-k, 6uprai pecu~iiarly apt; ‘Hsving a p&ace of busiIDIWS rbe~e de-sits am received 6nd paid out on checks, 

l cul whtke monty is 1tPsned upon recurity, is t&e sub- 

@t@aCt od the bUBinW66 Ot 6 bWhk6r. 

“#C frlkws that tht proposed plan does not fall 

viMa the itikibition ef tke Bruaer Case, au#a, (LS to 

t&e totablirhment of branch baak6, nm d-6 it conflict 
r 

. . 

i 

Hoa. Jo. M. Falkner, Page 3 (V-1040) 

with th8t 0piAon tn any other paoticular, Baaks are 

the depositor l&e of moe t of the funds of the country, 

end the above decision is base.& on the prix%ciptW that 

they axe quasi public institutions established and regulated by statate. The safety of the funds is caseflilly 

guarded, and this calls far the exercise of discretion 

and direct control upon the part of the d&rectors and 

chief ofhors in the matter of Ibone, discounts, investmoats, sad other like duties. Branch be&s in effect 

carsy aa the s&me bueinees as that conducted by the 

parent inetitalioa wi,thout being subject to the safepwsds thrown arolrmd the establishment and administration of tb# I&t&c, and therefore such brenches are 

oat mly unauthorized by the statate but impliedly inhibtted by it. That opiaion, however, s~pressly recognices 

cbc r&g&t of a bnk to ‘have, as many duly l ppcrinted a- 

~#ents *S dtr neds require;~end theBe qents, bmong othm tblngs, may xeceive amt forward to it at its place of 

bunhers tha money d parsons who desire w deposit 

w+$b it. ’ 

, 

“In principle t&e same rule would apply to agents 

who merely receive deposits and pay out cheeks on demmd, dutisc that am incidental to the business, but 

which do net require special disctetion and business 

wzumen. Tfm peyling tdller et a bbnk should have a tech- 

~%rwled#e of h&ndwriting and be able to detect 

forgeries and identify l imtrPtsr6, and both he and tho 

recafvfng teller should be eccur&Le in their calculations. 

But: wither of these apots, COI\ loan money ‘or invest 

Fhe banktng funds, and the fact that these <minor duttes 

are carl’ied on at mbre than one place in tie wise affects 

For ill~uatr*tion: If a bank occuIrlt, can it- doubted&at it can 

qstablioh en office for the receipt 

ment 81 c#ecks at each caner of i 

separate books at e&h place? ClearIy the installation 

of such ofl’lces in the bw l8iZg is incidetital to that busi- 

&~%a, an# such ah etran(ament wmino injurious 

effect up3 the fiMnCk1 m*mpment 0LDd contra1 of the 

bank’s bwinas~, a& the officials char@ with these duties da not devote their etne to the drtaitc of Lhe receipt 

ef deposit c pyment of ehedm.~ o .‘I &mphsis supplied.) 

##&hr.iep#i& that the propo8eil plan would not constitute a ‘%aWuch bsnk. ” 

Article 342-9Q3,, V.C.S., in.additian to prohibiting b?&nch 

boeks, provides : 
. . 

Han, J, h4, Falkner, Page 4 (V-1046) 

‘Al0 state, nationat or private bank sfbsll p I . 

c.ash checks or ‘receive’ deposits except in ite own bank- 

,ing house, ” 

If the new structure, wheubuilt, becqmes a part of the 

,,.Bujk’s ‘“banking house” tti the proposed pLn will not viblate the 

;I@ovieions- of aaid Article. ; 

T&a contamplatad new structure, although to be erected across the 8~~4 from the original ‘@banking house,” will be 

physically joined thereto by a tunnel under the street, which you 

sfate will be suitable for, passage back and forth,, It is evident that 

besides being;‘joinad physically, the new structure, including the 

passageway,~~iII be in &ore proximity to the present’building. It 

will be used in oeamction with the ori&nal building and as a unit 

_L wilI be devoted to one general, common purpose. It is OUB opinion 

&+t tlae two ,@=ucturss will in seallty be one and when used in the 

.: inner pxoposed,wiLl constituttr the bnk’s “banki~ houee. ” To 

h$Stl that said Article Pequices deposits to be axade in a bank’s origipl banking building, and not in an addition thereto would sacrifice 

fRe’~real spirit of the law to pure IitecalLm. 

This opinion is macessarilp Etmited to the factual eitoation presented. 

SUMMARY 

A uew ‘dtmchure erected acros~s the steeet Srom 

a~baakPs .?mWag base” sad connected therewith by a 

tubiml ‘s&able S&T passage back and forth and used-to 

receive depoits does not conlmavenc the provisions of 

ArtMa XVI, Section 16, of thtr Texas Constitution, nor 

of Artkc~ 341-903;V.C,S., relative to bsaacb bank&g 

or t*e mceiviag of depoeitr by a bank at a place other 

olmo~uq LenbkiIag rwuse, 

Yours VeEy tmly, 

PRICE DANIEL 

Attorney Ctnwal 

APPROVEIT: 

Joe Greenhill 

First Assistant 

PrLe Daniel 

Attorney Genesal 

-’ w. v,. Gepperi . 

Assistnut 

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